The Swedish government has Proposes some tax changes on 30 March 2017, regarding taxation of real estate. The proposal will now be referred to stakeholders for consultation before a final version is handed to Parliament for voting. The new rules are proposed to enter into force on 1 July 2018.
The key features of the process are:
-The sale of a company whish’s assets mainly consist of real estate will, simplified, be taxed as if the real estate was sold separately. The company sold will be liable to pay the tax.
– The stamp duty should no longer be levied on intra-group property transactions and the stamp duty for companies is dropped from 4.5% to 2%.
-Intra-group real estate transactions of land and buildings that can be carried out below market value are to support continuity in terms of acquisition values, accumulated depreciation and the tax residual value.
– A tax impartial transfer of real estate below the fair market value will have no effect on the acquisition value, tax base, and tax reductions made.
On 1 March 2017, the South African Revenue (SARS) issued a private binding ruling no. BPR 267 regarding dividends tax and the ‘most favoured nation’ clause in a tax treaty concluded with Sweden. The ruling determines whether dividends tax must be withheld when a dividend is paid to the beneficial owner that is a resident of the Kingdom of Sweden. Sweden and South Africa concluded the SA/Sweden tax treaty which, when read with the Protocol, includes a ‘most favoured nation’ clause.
The ruling is mainly issued on the basis of an application from a company incorporated in and a resident of South Africa that is a wholly-owned subsidiary of a company incorporated in and a resident of Sweden. According to ruling, applicant will not be required to withhold dividends tax from the dividend payments to parent company if parent company complies with the documentary requirements in section 64G(3). The ruling describes that the MFN treatment under the treaty with Sweden was triggered by the South Africa – Kuwait Income Tax Treaty (2004).
This binding private ruling is valid for a period of three years from 7 December 2016.
The regulation on the automatic exchange of country-by-country (CbC) reporting (the Regulation) was published in the Official Gazette on 14 March 2017. The law proposal had been adopted on 1st March 2017. The Regulation, which will enter into force on 1 April 2017 and also available here.
The government announced on 24 February 2017 its decision to withdraw plans to introduce a special tax on banks and other financial institutions. The bank tax was originally intended to eliminate the tax advantage the banking sector receives due to the fact that financial services are exempt from VAT.
Recently, the Swedish Government proposed a new legislation regarding tax on chemicals in certain consumer products. Accordingly, the following procedures are proposed:
(i) Products subject to excise duty are defined using the tariff classification in the European Community’s Combined Nomenclature (CN codes), and thus the proposed legislation lists a number of CN codes for the products intended to be taxed.
(ii) The proposed excise duty rate is approx. US$1 per KG for kitchen appliances and approx.
(iii) The taxable persons are commercial manufacturers and importers of the relevant goods. There is also a possibility to become taxable by registering as an approved warehouse holder.
(iv) The tax is due when the taxable goods are manufactured or brought into Sweden. Also, approved warehouse holders can defer the tax until the goods are delivered to someone who is not an approved warehouse holder, moved to one of the approved warehouse holders’ stores for retail sale or used for purposes other than sales and when the approval as warehouse holder is revoked.
(v) A deduction of 50% of the excise duty should be allowed for electronic products that do not contain additive compounds of bromine, chlorine or phosphorus.
(vi) Distance sales of the relevant goods by foreign producers/retailers directly to Swedish consumers are not taxed.
Furthermore, there is no tax liability for goods delivered to approved warehouse holders. Goods that have already been taxed, delivered to customers in other countries, completely destroyed by unforeseen events or force majeure, left for recycling or have been reused in the manufacturing of taxable goods are not taxable for approved warehouse holders.
This law will be effective from 1 April 2017 and applicable from 1 July 2017.
The Swedish Administrative Court of Appeal in the case of: Gothenburg (Kammarrätten i Göteborg) case number 2276-15, has found a German company to have a permanent establishment (PE) in Sweden due to its annually recurring short-term activities in the winter environment in northern Sweden. Although the six-month threshold was not passed in any of the years in question, the recurring activities were considered sufficient to constitute a fixed place of business.
The conclusions of the Court were that the company regularly conducts business from the same place in Sweden. The Court also stated that the tests in Sweden cannot be considered to be of a preparatory or auxiliary nature, therefore the company had established a fixed place of business in Sweden through which a part of the company’s core business was carried out. The time to appeal expired at the end of December 2016. The decision has not been appealed to the Supreme Administrative Court and the ACA’s decision is consequently final.
This decision confirms the strict interpretation of the Swedish Tax Agency and Swedish Courts when it comes to PE assessments in general and the exemption for preparatory and auxiliary activities in specific. However, this decision distresses many companies carrying on the same or similar activities in northern Sweden.